If you`re a veteran or military service member, you may be eligible for a VA loan. These loans offer many great benefits including no PMI and no limit on the amount that you can borrow.
It is important to remember that these benefits have limitations, so it is important to find a lender who specializes only in VA loans.
No PMI
Unlike other mortgages, VA loans don`t require private mortgage insurance (PMI). PMI is an extra fee that buyers usually have to pay on conventional mortgages that require a down payment of less than 20%.
VA loans do not have PMI because the Department of Veterans Affairs supports these home loans and reduces the risk for lenders.
VA loans are a great option for homeowners because they don`t require a down payment and have low interest rates.
Not only can you buy a home with a VA loan, but you can also refinance a current non-VA mortgage into a VA loan. There are several types of VA loans, including a VA Purchase Loan, IRRL, Streamline Refinance and Cash-Out Refinance.
There are no limits on loan amounts
If you are a veteran or active-duty service member with full VA home loan entitlement, you can finance as much as your lender will underwrite. These loans are known as VA Jumbo Loans.
Blue Water Navy Vietnam Veterans Act has eliminated all guaranty limitations on full VA loan entitlements for eligible borrowers. To be eligible for the loan, however, you will still need to meet certain lender requirements.
Additional requirements may be required, such as income, credit score and debt-to–income (DTI), ratios. These guidelines can be discussed with your lender.
The conforming loan limit in your county determines the maximum VA mortgage amount. Loan limits in high-cost counties are often higher than those in lower-cost areas.
There are no credit score requirements
The VA doesn`t set a minimum credit score for its loans, but individual lenders may. Lenders will look at the full loan profile of an applicant and consider their credit history, debt-to-income ratio, and income before making a decision.
Having a good credit score is one of the most important factors in getting approved for a VA loan. A healthy credit score can help you save money and get a lower interest rates over the life of your loan.
If you have low credit scores, there are steps you can take to rebuild your credit score. These include paying your bills in time and not maxing your credit cards.
Another way to improve your credit score is by becoming an authorized user on someone else`s credit card account. This is a great option for those with bad credit and who want to improve their credit score before applying to for a VA loan.
No Down Payment Requirements
One of the biggest perks of VA loans is that you don`t need to make a down payment. This is a major selling point, as conventional mortgages require that borrowers make a down payment of at least 20% of the purchase price.
In addition, conventional loans are backed by private mortgage insurance (PMI). This can add hundreds of dollars to your monthly payment.
There are certain situations when you might need to make a downpayment. For example, you might be required to put down money if the home you`re buying appraises lower than your agreed-upon purchase amount.
You also might need to make a down payment if you`re buying a property that`s more than the VA loan limit in your county. The amount you`ll need to put down can vary depending on your remaining entitlement, the lender`s rules and other factors. Ask a VA loan officer for assistance if you are unsure about the down payment requirements.